After qualifying based on not having a prior Chapter 7 discharge within 8 years an Chapter 13 within 6 years, passing the means test, and having little disposable income, a Chapter 7 discharge not only takes less time, but is less expensive than Chapter 13.
Chapter 7 can be ideal for candidates that do not have a lot of non-exempt property and have incomes lower than the median for a family of their size. The chapter 7 time frame can last four to five months compared to three to five years for a chapter 13. Chapter 7 involves only one meeting with a Trustee as compared to a meeting with a Trustee and confirmation hearing in a chapter 13. Furthermore, chapter 7 attorney fees are typically less expensive than Chapter 13.
Chapter 7 is a good option to consider if you qualify to file, are up to date on your mortgage and any cars you would like to keep and have uncontrollable medical or credit card debt. As a reminder, mortgages and cars are secured debt (creditor can foreclose or repossess if not paid) whereas medical and credit card debt are unsecured (not connected to any property so creditor cannot foreclose or repossess).
Chapter 7 Bankruptcy eliminates most unsecured debt including medical, credit card debt and personal loans. Furthermore, if you are current on your car and/or house payments you can reaffirm or retain and pay if you want to keep them so long as your equity in them fits within the Utah exemption levels.
After filing a petition for bankruptcy, the automatic stay is in place and creditors are required to stop collection calls, letters, lawsuits, repossessions, foreclosure, and garnishments. Emergency petitions can be filed with as little as your personal information, list of creditors, and taking a credit counseling course. However, with an emergency the Utah Bankruptcy Court requires a completed filing within 14 days.
Chapter 7 Bankruptcy is sometimes called a liquidation bankruptcy because the Trustee may sell your non-exempt property to pay creditors. Although this doesn’t happen, imagine the Trustee taking a photograph of all of your property at the time of filing and everything that is not protected (exempt) is sold and distributed to pay creditors. Typically one is able to keep a significant portion, if not all of their property so long as the property fits within Utah state exemptions, one did not sell property, give it away, etc. allowing them to file in good faith. Do I Qualify for a Chapter 7?